Kamal Nath criticises RBI for SEZ notification
After reproaching the IMF for its attack on India's SEZ policy, Union Commerce Minister Kamal Nath has criticised the Reserve Bank for its "inconsistent approach" toward Special Economic Zones.
By PTI |
MUMBAI: After reproaching the IMF for its attack on India's SEZ policy, Union Commerce Minister Kamal Nath has criticised the Reserve Bank for its "inconsistent approach" toward Special Economic Zones.
"The Reserve Bank must be consistent in its outlook on SEZs," he said on the sidelines of a programme here last night when asked to comment on the recent notification on commercial banks' exposure to SEZs.
The apex bank asked the commercial banks to treat SEZs at par with any other real estate project when it comes to lending. As a result, SEZs would find borrowing from banks costlier.
Nath's criticism of RBI comes just after he said he subscribes to Congress President Sonia Gandhi's view against diversion of farm land for industrial and non-agricultural use.
Kamal Nath also asked the industry to take up the issue of higher provisioning by commercial banks for SEZs with RBI.
"RBI should be consistent. In its own report, lauding the policy it had said that the SEZs are engines of growth and now in the notification, it raised the risk weightage," a visibly aggreived Nath said.
Following the notification, RBI drew severe criticism from the industry, which is of the opinion that being an extremely important and powerful concept, SEZs could fuel tremendous economic growth, generate new employment opportunities and bring in large investments from all over the world.
RBI had asked banks to make provisions as also assign appropriate risk weights for exposures in the SEZs and treat them at par with any other commercial real estate sector.
Nath maintained that UPA Chairperson was not against setting up of SEZs, but she only insisted that prime agricultural lands should not be compromised for industry and SEZs in particular.
He also said that the Board of Approval has already taken up the matter with state governments on the issue of diversion of primary agricultural lands for SEZs.
At the annual world bank IMF meeting in Singapore last week, Nath had told the IMF Chief Economist Raghuram Rajan that the IMF should not sit in Washington and criticise SEZs.
Rajan had said that there are many SEZs, particularly in the IT sector, being set up to take advantage of tax benefits.
In excess of 150 SEZs are currently at various stages of completion and another 225 SEZs are awaiting clearance.
"The Reserve Bank must be consistent in its outlook on SEZs," he said on the sidelines of a programme here last night when asked to comment on the recent notification on commercial banks' exposure to SEZs.
The apex bank asked the commercial banks to treat SEZs at par with any other real estate project when it comes to lending. As a result, SEZs would find borrowing from banks costlier.
Nath's criticism of RBI comes just after he said he subscribes to Congress President Sonia Gandhi's view against diversion of farm land for industrial and non-agricultural use.
Kamal Nath also asked the industry to take up the issue of higher provisioning by commercial banks for SEZs with RBI.
"RBI should be consistent. In its own report, lauding the policy it had said that the SEZs are engines of growth and now in the notification, it raised the risk weightage," a visibly aggreived Nath said.
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Following the notification, RBI drew severe criticism from the industry, which is of the opinion that being an extremely important and powerful concept, SEZs could fuel tremendous economic growth, generate new employment opportunities and bring in large investments from all over the world.
RBI had asked banks to make provisions as also assign appropriate risk weights for exposures in the SEZs and treat them at par with any other commercial real estate sector.
Nath maintained that UPA Chairperson was not against setting up of SEZs, but she only insisted that prime agricultural lands should not be compromised for industry and SEZs in particular.
He also said that the Board of Approval has already taken up the matter with state governments on the issue of diversion of primary agricultural lands for SEZs.
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At the annual world bank IMF meeting in Singapore last week, Nath had told the IMF Chief Economist Raghuram Rajan that the IMF should not sit in Washington and criticise SEZs.
Rajan had said that there are many SEZs, particularly in the IT sector, being set up to take advantage of tax benefits.
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In excess of 150 SEZs are currently at various stages of completion and another 225 SEZs are awaiting clearance.
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